timing the IPO market

Contents

Session recap

Red light, green light: timing the IPO market

Timing the market for an initial public offering (IPO) isn’t as important as making sure that your company is ready to go public. That theme was echoed by the panelists who took part in “Ringing the bell: timing the IPO market” during the Forum.

The right time “Do it when it’s right for your company, not if the market is right,” said panel member David Erickson, Managing Director, Barclays. “The market will come back, but you need to do it when it’s right for your company. Don’t let the market define that opportunity for you.”

The panel also included Bob H. McCooey Jr., Senior Vice President, New Listings and AP, the NASDAQ OMX Group, Inc., and Mark Johnson, Managing Director, The Carlyle Group, and was moderated by Joe Muscat, West Sub-Area Strategic Growth Markets Leader.

The right mood Muscat said that as of October 31, 2012, the US market has recorded some 121 IPOs. The market is almost certain to surpass 2011’s IPO activity. McCooey said the overall mood of the market is optimistic. “The queue is getting better,” he said, though more companies are filing confidentially as they take advantage of the provisions of the JOBS Act of 2012.

“The market will continue to be robust for the foreseeable future, although we’ve had some macroeconomic events that threw everyone a delay,” he added, noting that Hurricane Sandy forced a number of companies to cancel road shows in New York City.

The right preparation “The IPO market is open [and] receptive to good-quality IPOs,” McCooey said, “but you need to prepare, prepare, prepare.” Companies planning an IPO should lock down their financials at the end of the quarter six months before going public, he said. “That way, when you come out of the gate, you’ll have already come out of the process several times. If you stumble out of the gate, it’s a long climb back.”

The right signs Erickson recommended checking three indicator lights before going public. “One, check the macroeconomics for the market. How is it going? Have we had five red days in a row? Are investors waiting to join? Two, look at comparable companies in your sector. How are those companies doing? Are investors putting more money in? And third,” he concluded, “How is the new issue market doing? Are existing companies doing follow-on transactions? Are deals getting priced in the right range?”

All three lights don’t have to be green, he said, but you don’t want to go public when all three are red.

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